Oil price surges past $101 after shutdown of Saudi pipeline network

Saudi Arabia cancels all European crude oil orders for September after drone attacks force the country to shut down its main east-west pipeline and halt shipments from the Red Sea port of Yanbu. US oil executives warn that global fuel markets have entered a serious crisis. The US oil price rises to around $101 per barrel, while diesel reaches a record $6.23 per gallon.

In brief:

• Saudi Arabia scraps all European oil orders for September after drone attacks on its pipeline network
• The US oil price rises to $101 per barrel and diesel reaches a record $6.23 per gallon
• US oil executives say commercial inventories are being depleted and strategic reserves are increasingly being tapped

Drone attacks shut down Saudi pipeline network

The affected east-west pipeline transported nearly 2.5 million barrels of oil per day. The forced shutdown therefore hits a substantial part of Saudi export capacity and forces European buyers to look for alternatives in a market that is already under pressure.

Shipping through the port of Yanbu, on the Red Sea, has also been halted as a result of the attacks. This removes a second export route as well, further deepening the shortage on global fuel markets. Blockchainstories previously reported on the impact of Houthi attacks and rising tensions in the region on the markets.

Oil executives see no quick recovery

According to the Wall Street Journal, US oil executives warn that the buffers that have protected global fuel markets so far are largely depleted. Both commercial inventories and strategic reserves are being drawn down further and further.

Chevron chief executive Mike Wirth says he sees no reason for improvement in the short term: “I wish I could give you a reason why the situation would improve, but at this point it is hard to see how that could happen.” The oil price and fuel markets therefore remain under sustained pressure, with no clear turning point in sight.